The 8 wastes: where is your business losing time & money?

In order to have a competitive advantage and remain sustainable, your company must be efficient and effective while also providing a high-quality product or service to your clients. Your customers want quality products and services at a reasonable cost, delivered within their required time frame.

Chances are there are processes within your business that aren’t as efficient as possible, and those processes are consuming time, effort and money. In short, your business is being wasteful.

The modern concepts of ‘Lean Thinking’ and the associated ‘8 Wastes’ were originally developed by Toyota and initially gained popularity in the manufacturing industry. However, every business contains ‘waste’ – in fact, the concepts apply to almost any type of business. Improvements in any of these areas can ultimately lead to an improvement in your bottom line.

So let’s start by taking a look at the eight major areas of waste:

  1. Motion
    Any movement by people or information that doesn’t add value or is not necessary to produce a product or service. This could include someone having to go back and forth between offices to find files or daily information, or unnecessary travel.
  2. Rework
    Having to re-do tasks or services, such as having to correct problems due to poor quality, having to call a customer back for missed information, fix an error, etc.
  3. Inventory
    Goods or information that are sitting idle (not being processed or used), then sitting on your shelves without buyers.
  4. Overproduction
    Producing too much product before it’s ready to be sold or making something earlier or faster than needed.
  5. Skill/unused talent
    Having employees who don’t have the right skills, who are spending time doing the wrong tasks, or whose skills are not being used in the most productive ways.
  6. Transportation
    Transporting materials or information from one location to another when not necessary, such as an unnecessary use of couriers, that may cause a delay or add cost.
  7. Waiting
    Having to wait for approvals, equipment, materials, parts or people in order to complete tasks, products or services.
  8. Excess servicing, processing or production
    Steps that don’t add value or are not required by the customer, such as extra forms, unnecessary approvals, or doing more than is needed.
Reducing waste at your business

Once you’re familiar with these eight areas, the next step is to identify the wastes in your processes and develop a plan to eliminate them. Gather a team together that includes the people who are closest to your business processes for a waste identification session. Brainstorm where you think there are wastes in your processes, based upon the 8 Waste categories.

Then it’s time to watch your process. This is called a Gemba Walk. Watch every step of the process and document what you see. Look for the wastes and record them.

Then, collate your brainstorming and observations and identify wastes to eliminate. Lean Thinking is about small incremental changes – you don’t need to eliminate all wastes at once. Working on one at a time is fine!

You might need to rank your waste opportunities and prioritise what you’re going to eliminate first. Your aim here is to improve the process for the customer, focusing on waste that will improve Quality, Delivery (the time it takes to fulfil the customer’s order) or Cost.

Draw up short plans that include a clear direction on who will be in charge of each step, what the strategy is for implementation, a timeline for the actions, and a way to measure success. A similar process can be adopted for each waste you focus on. Don’t forget to update your procedures and train staff on the new process too, if required.

What you’ll gain

By reducing areas of waste in your business, you will improve your customer experience, save money, increase efficiencies and boost employee morale. Ultimately, you’ll increase the value of your business and move forward on the journey of taking your business from good to great.

Reducing waste is especially important if you’re thinking of selling your business, because buyers will want to see that your organisation is running as efficiently as possible.

About the Author

Jessica Fazackerley
Jessica has a real handle on the ‘numbers’, and an ability to think fast and spot any potential business problems a mile away. Jessica helps to change mindsets, planting the right seeds with effective training and coaching.

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